Heritage Insurance Holdings, Inc., a nationally expansive US property and casualty insurer headquartered in Florida, is the latest sponsor to benefit from catastrophe bond market conditions, securing its targeted $250 million of US named storm reinsurance from the Citrus Re Ltd. (Series 2026-1) issuance at reduced pricing, Artemis can report.
Heritage has been sponsoring catastrophe bonds since 2014, when its first Citrus Re cat bond came to market.
This new Citrus Re Ltd. Series 2026-1 catastrophe bond issuance is set to be the eleventh cat bond under the Citrus Re name that Heritage has sponsored and that we have listed in our extensive Deal Directory.
Heritage came back to the catastrophe bond market in late February for this issuance, targeting $250 million of collateralized US named storm reinsurance from the capital markets.
As we reported in an update last week, we were told that target remained the same, but that Heritage was seeking to lower the pricing of the risk interest spread it would pay for the coverage.
Like the majority of cat bond sponsors in recent months, it seems Heritage has been successful, with the Citrus Re 2026-1 notes now finalised and priced at reduced levels, compared to the initial guidance they were offered with.
With this latest cat bond now priced for Heritage, the insurer has successfully secured a new multi-year source of fully-collateralized named storm reinsurance from the capital markets, totalling $250 million of limit.
Citrus Re Ltd. will now issue and sell two tranches of Series 2026-1 notes to investors, that will provide Heritage and its subsidiaries with a $250 million three-year source of indemnity triggered, per-occurrence US named storm reinsurance protection across the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island and Virginia, as well as Hawaii.
The $100 million tranche of Class A notes that Citrus Re will issue will cover named storm risks across the mentioned US states, but not Hawaii and have an initial expected loss of 2.5%.
These notes were first offered to cat bond investors with spread guidance in a range from 5.25% to 5.75%, but that was reduced to a spread of 5.25% and sources now tell us this is where the Class A notes have been priced, so at the bottom-end of initial guidance.
The $150 million tranche of Class B tranche of notes will provide named storm risks across the mentioned US states and also Hawaii and come with an initial expected loss of 3.32%.
These notes were first offered to cat bond investors with spread guidance in a range from 6.75% to 7.25%, which was later revised to between 6.25% and 6.75%. We’re now told the initial risk interest spread for the Class B notes was priced at 6.25%, so below the initial guidance.
Heritage prioritised price over size for its latest Citrus Re catastrophe bond and has benefitted from market conditions and investor appetites as a result.
As we said before, $235 million of Heritage’s current $535 million of catastrophe bond risk capital outstanding (see our our cat bond sponsor leaderboard) is scheduled to mature before the 2026 hurricane season, from the Citrus Re Ltd. (Series 2023-1) issuance.
As a result, once this new deal settles and that older cat bond matures, Heritage will go into the 2026 hurricane season with at least $550 million of cat bond backed reinsurance in-force, it now seems.
As a reminder, you can read all about this Citrus Re Ltd. (Series 2026-1) catastrophe bond and every other cat bond issued in our extensive Artemis Deal Directory.
View all of our Artemis Live video interviews and subscribe to our podcast.
All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.
Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.
